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Instead of using half a dozen of the two dozen connectors on the back of a home theater component, you use just one HDMI connection. HDMI offers two big benefits:

Instead of needing multiple cables for the video signal and multiple cables for the sound signal, HDMI integrates all video and sound signals onto a single, thin cable. It makes it trivially easy to connect components together.

Instead of converting digital signals to analog (to run through the cables) and then back to digital, everything on an HDMI cable remains in its original, uncompressed digital format.

The first benefit should drastically simplify home theater setup, and the second benefit should significantly improve picture and sound quality by keeping everything digital as it moves between components.

Of course, if you want to take advantage of these benefits you have to buy all new stuff, and it all has to have HDMI connectors. But in theory, if enough manufacturers get on board, everything should become HDMI-compatible eventually.